AFP Retirement and Separation Benefits System v. Sanvictores
REITERATIONFacts
The Antecedents: Eduardo Sanvictores (Sanvictores) entered into a Contract to Sell with Prime East Properties, Inc. (PEPI) and AFP Retirement and Separation Benefits System (AFPRSBS) for a parcel of land. Sanvictores paid the down payment in 1994 and the full purchase price in 1999. Despite full payment, PEPI and AFPRSBS failed to execute the deed of absolute sale and deliver the title. After repeated follow-ups and a period of no communication from PEPI, Sanvictores filed a complaint for rescission of contract, refund, damages, and attorney's fees. Procedural History: The Housing and Land Use Regulatory Board (HLURB) Arbiter ruled in favor of Sanvictores, declaring the contract rescinded and ordering PEPI and AFPRSBS to jointly and severally pay Sanvictores the full purchase price with interest, moral and exemplary damages, attorney's fees, costs, and an administrative fine. The HLURB Board affirmed this decision on appeal. The Office of the President (OP) also upheld the HLURB Board's decision, finding PEPI and AFPRSBS jointly and severally liable as they were referred to as a single 'seller' without delineation of rights and obligations. The Court of Appeals (CA) affirmed the OP's decision, holding that the obligation was solidary pursuant to Article 1207 of the Civil Code, but reduced the interest rate on actual damages to 6% per annum. The Petition: AFPRSBS filed a petition for review on certiorari with the Supreme Court, assailing the CA's decision, primarily arguing that it should not be held jointly and severally liable with PEPI, nor liable for damages and administrative fines, as it was not the owner/developer, not the seller, and the contract was not signed by its authorized representative.
Issue(s)
Whether AFPRSBS is jointly and severally liable with PEPI to Sanvictores. Whether AFPRSBS is liable for moral and exemplary damages, costs of litigation, and attorney's fees. Whether AFPRSBS is liable to pay an administrative fine for violation of PD 957.
Ruling
The petition is denied. The Court affirmed the decision of the Court of Appeals, holding AFPRSBS jointly and severally liable with PEPI to Sanvictores.
Ratio Decidendi
On the joint and several liability of AFPRSBS: The Court reiterated the principle that factual findings of administrative agencies, when affirmed on appeal, are entitled to great weight. In this case, the HLURB, OP, and CA consistently ruled that AFPRSBS was jointly and severally liable with PEPI. The Contract to Sell expressly referred to PEPI and AFPRSBS collectively as the "SELLER," not "SELLERS," indicating they were considered as a single entity in the transaction. Furthermore, there was no delineation of their respective rights and obligations within the contract. The presence of signatures from representatives of both PEPI (Espina) and AFPRSBS (Mena) as "Seller" and "Owner" in the contract and deed of restrictions further supported their joint involvement. AFPRSBS's failure to deny Mena's authority to represent it, while focusing on Espina's lack of authority, led the Court to conclude that AFPRSBS clothed Mena with apparent authority, making it estopped from denying his representation. This aligns with the principle of agency by estoppel, where a principal is bound by the acts of an agent with apparent authority. On the liability for moral and exemplary damages, costs of litigation, and attorney's fees: The Court found that AFPRSBS, by appearing as a co-seller in the Contract to Sell and by being represented by Mena, who was clothed with apparent authority, became privy to the transaction. Its failure, along with PEPI, to deliver the title and execute the deed of absolute sale despite full payment constituted a breach of contract. This breach, which caused Sanvictores undue distress and inconvenience, justified the award of moral damages. Exemplary damages were also warranted to deter similar conduct. The award of attorney's fees and costs of litigation was a consequence of the successful claim for damages and rescission. On the administrative fine for violation of PD 957: The HLURB Arbiter imposed an administrative fine for violation of Section 20 in relation to Section 38 of PD 957. The HLURB Board, OP, and CA affirmed this. Since AFPRSBS was found to be a party to the Contract to Sell and failed to fulfill its obligations under the law and the contract, it was correctly held liable for the administrative fine. PD 957, the Subdivision and Condominium Buyers' Protective Decree, aims to protect buyers from fraudulent and exploitative practices in the real estate industry, and the failure to deliver title after full payment is a clear violation thereof.
Main Doctrine
A corporation may be held in estoppel from denying the authority of its officers or agents who have been clothed by it with ostensible or apparent authority, especially when dealing with innocent third persons. When two entities are jointly referred to as 'Seller' in a contract without delineation of their respective rights and obligations, and both are represented by signatories, they may be considered to have intended to be bound jointly and severally.